Mortgage-Paying Habits are Improving, but Ever So Slightly

Mortgage-Paying Habits are Improving, but Ever So Slightly

Mortgage delinquencies are beginning to drop, but where has the most improvement occurred?

We have heard about people paying their credit card bills before paying their mortgage payments in recent months. Many homeowners have forgone their mortgage payments in an effort to keep other bills current because they have felt it was more important to pay those bills on time rather than their mortgage payments.

But as we enter the second half of 2011, it appears that is slowly starting to change.

According to TransUnion, one of the main three credit reporting bureaus, the number of people who are at least 60 days late on their mortgage payments has decreased for the sixth consecutive quarter. In 2010, the percentage of homeowners who were 60 days or more late on their mortgage payments was 6.67 percent (that number was at its all-time highest in 2009 at 6.9 percent). The current percentage of homeowners who are at least 60 days late on their payments is 5.82 percent.

Tim Martin with TransUnion’s housing market division attributes part of this decrease to the stricter lending policies that banks are following these days. Banks and lenders are being much more cautios about who they give mortgage loans to and only those borrowers with higher credit scores are qualifying for the loans. Theoretically, the higher the borrower’s credit score, the less likely they are to default on their mortgage payments.

The study included more than 27 million consumer records that TransUnion has in its database and indicated a broad improvement across the entire country. The research showed that the number of late mortgage payments was down in 49 states since the beginning of 2011. In Vermont, late mortgage payments increased, but that was not a cause for concern as the percentage of mortgage payments that are late in that state remains well below the national average.

While the numbers are improving, the four states that were hit the hardest by the mortgage crisis continue to have the highest percentages of mortgage delinquencies. They are Nevada (13.04 percent), Florida (13.91 percent) California (7.83 percent) and Arizona (7.78 percent). Nevada still leads the nation in the number of foreclosures with about 1 in every 115 households getting a notice of foreclosure. On the opposite side, the mortgage delinquency rate in North Dakota is the lowest in the nation at just 1.45 percent. South Dakota’s delinquency rate is only 2.31 percent and Nebraska and Alaska’s delinquency rates are 2.43 percent and 2.64 percent respectively.

TransUnion predicts that the delinquency rate across the United States will continue to drop throughout the rest of the year.

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